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  • ACS Australias Digital PulseDriving Australias international ICT competitiveness and digital growth 2018

    ACS A

    ustralias Digital Pulse

  • ForewordAustralia has historically been a net importer of technology. Large global platforms that have scaled offer an affordable entry price. As a result, for Australia to remain a country offering higher paying jobs, we have needed to be focused higher up the supply chain, creating added value.

    Over the last 12 months, there has been much to be optimistic about. In the 2017 Australias Digital Pulse report there was evidence of a digital boom occurring in Australia, with 40,000 tech jobs created in the previous two years, and IT services exports up 12% to $2.8 billion. In this years report that growth has continued. IT service exports have grown to $3.2 billion and there were 22,300 new jobs created in just the past year.

    At the same time, technological advancement has seen the world shrink. Digitisation and automation mean geography isnt the cost inhibitor it once was. Australians can buy goods from all over the world via online supply channels such as Amazon, Alibaba and eBay. Even the nature of technology investment too is no longer just about productivity gains its about meeting the expectations of more connected and empowered customers.

    If you are delivering a digital product or service using technology, your prospective customer base will always compare the user experience to that of YouTube, Google and Facebook.

    In last years edition of Australias Digital Pulse, we asked which policy priorities were needed to fuel Australias digital workforce boom. These included the need to build digital communities to facilitate collaboration and innovation, the enablers required to build a highly skilled talent pipeline for Australia, and new factors of production, such as data being the fuel for new business models.

    This year, we investigated Australias performance in terms of international competitiveness and looked at ways we can find new sources of economic growth.

    Rather than identify the skills required for Australia to continue its record 27 years of economic growth, we have applied a different lens, questioning what it would take to be a world leader in an age of emerging technologies such as artificial intelligence, machine learning, blockchain, IoT, drones and autonomous vehicles.

    And then, what would be required to ensure that all Australians can maximise their ability to participate in the fourth industrial revolution? How do we avoid what the Governor of the Reserve Bank, Philip Lowe, has described as a two-speed scenario emerging through the structural effects of technology?

    Finally, we take a look at where we might find the game-changing ideas that could unlock the next wave of economic growth for Australia. Where can our businesses and financial institutions find their next sources of significant growth? Could it be an industry standard for valuing data on balance sheets? Do intangible assets afford a way to unlock capital and investment? How can tax reform incentivise technology investment while recognising that government budgets need to live within their means? How can government technology procurement processes be enhanced to better diffuse technology throughout our economy, give our startups their demonstrated success, and have knowledge transfer disseminate via the public sector?

    It is ACS aspiration for Australia to be successful in a changing world by becoming a world leader in technology talent and a nation that fosters innovation and creates new forms of value. We feel confident that ACS Australias Digital Pulse will inform public debate and lead to the realisation of game changing ideas that will fuel our living standards over the next decade.

    Yohan Ramasundara Andrew Johnson President Chief Executive Officer

  • ContentsGlossary 2

    Executive summary 3

    Introduction 5

    1 Australias international competitiveness in ICT 6

    Consumers 9Businesses 10ICT sector 11Workforce skills 13

    2 Snapshot and forecasts of Australias ICT workforce and skills 16

    Australias ICT workforce: occupations, industries andskills 16Diversity in Australias ICT workforce 19Future demand for ICT workers 21

    3 TheimportanceofdevelopingandattractingICTtalent 24

    Developing Australias ICTtalent: education andICTskills 24Attracting ICT talent to Australia: skilled migration of ICT workers 28

    4 Economicdimensionsofdigitalleadership 32

    5 Policy to support an internationally competitive ICT sector 36

    Reassessing the tax landscape for digital investment overall 38Valuing and accounting for data as a company asset 42Using data as a tool for policy development 43Positive spillovers and collaboration in technology procurement 46

    References 48

    Appendix: Statistical compendium 51

    ACS Australias Digital Pulse | Driving Australias international ICT competitiveness and digital growth

  • Glossary

    ABS Australian Bureau of Statistics

    ACS Australian Computer Society

    AI Artificial intelligence

    ANZSCO Australian and New Zealand StandardClassificationof Occupations

    ANZSIC Australian and New Zealand StandardIndustrialClassification

    CfBA Centre for Business Analytics

    ASEAN Association of Southeast Asian Nations

    DAE Deloitte Access Economics

    ESIC Early-stage innovation company

    ICT Information and communications technology

    IMT Information, Media and Telecommunications (industry)

    IoT Internet of Things

    GDP Gross domestic product

    OECD Organisation for Economic Cooperation andDevelopment

    PISA Program for International Student Assessment

    R&D Research and development

    STEM Science, technology, engineering and mathematics

    UK United Kingdom

    UN United Nations

    US United States

    WEF World Economic Forum

    WTO World Trade Organization

    2

  • Executive summaryFor Australia to succeed as an economy in the coming decades of the 21st century, it will need to successfully participate in the next waves of the digital revolution. Thismeans using the creativity and skills of the Australian people; supporting the entrepreneurship and innovation of our businesses; and applying emerging technologies such as artificial intelligence (AI), machine learning and the Internet of Things (IoT). Digital success will enable growth and innovation across industries as diverse as manufacturing, agriculture and professional services. It will generate new jobs and help address a variety of social challenges, from reducing traffic congestion to deliveringhealth services more efficiently.

    By some measures, Australia is taking advantage of the opportunities offered by the digital revolution. Information and communications technology (ICT) services exports increased by more than 60% over the past five years to reach $3.2billion in 201617. Business ICT R&D increased by almost 50% to $6.6billion in the five years to 201516. But there are also early warning signs that Australia could end up a passenger in the digital journey, with other countries in the drivers seat. As an economy grappling with the transition away from its mining boom, Australia risks falling behind our international peers, which could have flowon effects on productivity and livingstandards.

    This edition of ACS Australias Digital Pulse is the fourth annual stocktake of the health of Australias digital economy, produced by Deloitte Access Economics for the Australian Computer Society (ACS). Its the most detailed examination of digital workforce trends, aimed at informing public debate about this important area of our economy. But this edition is more than just an annual update. For the first time, we directly benchmark Australias digital performance with that of its peers, and contemplate the magnitude of the benefits on the table if we can become a global leader in digital activity. We identify what success looks like in terms of Australias workforce and businesses, and some of the policies needed to support this digital activity.

    How does Australia perform on the international stage? We looked at 15indicators of digital performance across four themes: consumers, businesses, ICT sector and workforce skills. We gathered data from a range of international sources such as the Organisation for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), the United Nations (UN) and other research institutions. Overall, our average relative ranking is seventh out of 16 developed economies. So were ahead of the laggards, but lagging behind the leaders. Moreover, the past five years have seen almost no relative improvement. Others have matched our efforts.

    But first, the good news. Our ICT workforce grew to 663,100 workers in 2017, an increase of 3.5% from the 640,800 workers reported in last years report. Twothirds of current ICT workers currently in Australia are in technical, professional, management and operational roles, and 51% are employed in industries outside of ICT. Demand for ICT workers is set to grow by almost 100,000 to 758,700 workers by 2023, by which time almost 3million Australian workers will be employed in occupations that regularly use technology.

    Scratch beneath the surface and its a different story. With fewer than 5,000 domestic ICT graduates a year, the only way well reach workforce targets is by importing labour, much as weve done for the past five years. We need more ICT workers with skills in artificial intelligence, data science, cyber security and blockchain, and filling these positions with migrants suggests a missed opportunity to provide rewarding employment for the next generation of Australian workers. Furthermore, our existing workforce has diversity issues: only